CAH - Cardinal Health: Focus On Core Strengths And Operational Efficiency Enabling Margin Expansion
2023-05-24 23:46:39 ET
Summary
- In the past year, Cardinal Health (CAH: +50.95%) has rallied significantly, with share price action superior to both the broad market (SPY: +5.51%) and the healthcare industry (IXHC: +12.81%).
- This reflects a 34.80% in free cash flow from 2021-22 to $2.73bn and revenue growth of 11.62% in the same period.
- Beyond a recession-resilient business model, Cardinal has aimed for a leaner business model, with a focus on the dual verticals of pharmaceuticals and medical instruments.
- In doing so, Cardinal has become a more nimble organization, able to better position itself to take advantage of secular growth trends, such as an aging population, drug innovation, and homecare.
- Combined with a general undervaluation, Cardinal's broad-based corporate strategy leads me to rate the firm a 'buy'.
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Cardinal Health: Focus On Core Strengths And Operational Efficiency Enabling Margin Expansion